SK, Samsung vie for $238 mil. IT service deal to KDB

30-Jun-2020 Intellasia | KoreaTimes | 6:02 AM Print This Post

SK C&C and Samsung SDS took submitted tenders Monday for a contract to provide IT services to the Korea Development Bank (KDB) which is pursuing speedy digitisation amid the rising popularity of contactless transactions, according to company officials and industry sources.

The nation’s two leading IT service operators are competing to win the 287 billion won ($238 million) deal, after the sector’s smallest provider, LG CNS, dropped out of the megaproject.

SK C&C spokesman said SK Group’s IT service affiliate decided to submit the tender as part of moves to continue providing the state-run lender with IT services until January 2026. SK C&C has been partnered with the state-run lender since 2014. Although its contract was initially supposed to end in 2019, the company was allowed to extend it until January 31, 2021.

Samsung SDS declined to confirm whether or not it was taking part, but a source familiar with the issue said the IT service unit of Samsung decided to do so to win the lucrative deal. Samsung SDS had been in charge of KDB’s outsourced IT services between 1999 and 2014, before SK C&C signed its current contract with the bank in 2014.

“Because there have been not many large-size deals regarding IT services for the financial sector these days, many tech giants seem to be paying attention to the contract,” an IT industry official said on condition of anonymity.

Refusing to disclose the list of companies that took part, the bank said it would announce the preferred bidder July 3, after reviewing their proposals until Thursday.

“The purpose of this project is to enhance our IT service capabilities through stable operation of an information system and to get a foothold in advanced policy financing,” a KDB official said. “It will help us cope with changes in the financial industry, such as the digital transformation.”

After KDB sent the request for proposals to domestic IT companies in May, the project has drawn keen attention because the size of the domestic market for IT services related to finance has continued to grow.

While reducing the number of their physical branches and ATMs, domestic banks have struggled to attract IT experts to cope with the trend for contactless transactions.

Shinhan Financial Group said earlier it is aiming to hire 6,700 new employees over the next five years with digital experts accounting for more than half of them.

KB Financial Group has taught its employees technologies needed for chatbots, robo-advisers and fraud detection systems at the financial artificial intelligence research centre it opened at the Korea Advanced Institute of Science and Technology (KAIST).

However, most engineers have chosen to work for tech firms, rather than becoming bank employees, due to the rigid corporate culture and tough financial regulations.

“As there is a certain limit to banks hiring IT experts from outside, it seems their digital transformations have been stymied,” Kim Hoon, who directs analysis of financial systems at the Bank of Korea’s (BOK) financial stability department, said in a report in April.

Relatively small financial firms, such as card issuers, have also remained reluctant to directly hire engineers for short-term IT projects. They have therefore increased the number of outsourced workers over the past few years.

The proportion of outsourced workers among IT experts working for financial firms rose to 58.8 percent in 2019 from 56.8 percent in 2014, the central bank said.

Amid domestic financial firms’ dependence on outsourcing, the BOK advised them to come up with measures to reduce the risks from this.

“Financial firms should continue to make efforts to secure the safety of electronic financing with a security infrastructure, business continuity plans and tightened supervision of outsourced workers,” said Hong Kyung-sik, head of the BOK’s payment and settlement systems department.


Category: Korea

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